The Effect of Foreign Acquisition on Employment and Wages: Evidence from Finnish Establishments

Abstract

This paper examines the effect of foreign acquisition on wages and employment of different skill groups using panel data on Finnish es- tablishments for 1988-2001. Exploiting the availability of a rich set of pre-acquisition controls, we use various regression and propensity score matching methods, including difference-in-differences matching. The results indicate that foreign acquisition has a positive effect on wages. The magnitude of this effect increases with the level of schooling of the workers. The wage increase is not immediate, but happens within 1-3 years from the acquisition. Surprisingly, the matching results indicate that acquired plants reduce, although slightly and slowly, the share of highly educated workers in their employment.